Millennial shoppers embrace rebranded basics

American Giant sells its durable and stylish hooded sweatshirts with a patriotic, made-in-the-USA story.

Modern Citizen beckons the minimalist-budget fashionista with its curated assortment of affordable, quality “essentials.”

And Cuyana draws in customers with its slow-fashion narrative of investing in artisan-made luxury goods with its tagline “fewer, better things.”

Conscious consumerism is on the rise, and a crop of emerging San Francisco apparel startups are leading the charge with their own unique spin on standard-issue wardrobe basics.

With the shift of American buying habits toward greater online shopping causing a sharp decline in profits for traditional brick-and-mortar retailers, these niche brands are encroaching on the turf of retail giants by making better quality and more interesting products. In addition, they’re using their own behind-the-brand stories that appeal especially to Internet-savvy Millennials.

Modern Citizen sells a small selection of home accessories, as well as its own brand of women’s clothing, via its website and a showroom on Octavia Street in S.F.

Photo: Courtesy of Modern Citizen

“A new generation of consumers is rethinking the way that they buy stuff,” says Jess Lee, who co-founded women’s lifestyle brand Modern Citizen online in 2014 after three years at Gap’s strategy and business development division. “It’s a very different story now. It’s very individual and very me-centric. ‘This is who I am. This is what I look like. And these are the brands that cater to me.’”

5of 9Designer Andrew Neilsen (left) and creative director Lauren Young (middle) talk with American Giant founder and CEO Bayard Winthrop (right) at headquarters in San Francisco, California, on Wednesday, January 27, 2016.Photo: Liz Hafalia, The Chronicle

6of 9Modern Citizen carries the brand’s own women’s clothing via website and a showroom on Octavia Street in S.F.Photo: Courtesy of Modern Citizen

7of 9American Giant founder and CEO Bayard Winthrop at the company headquarters in San Francisco.Photo: Liz Hafalia, The Chronicle

8of 9The leather oversized carryall tote ($265), currently sold out, is one of Cuyana’s most popular offerings.Photo: Cuyana

9of 9Cuyana’s leather shopper tote.Photo: Cuyana

Industry behemoths from Wal-Mart and Macy’s to Gap reported lackluster post-holiday performances and have recently announced layoffs and store closings nationwide.

“What used to be considered the staple go-to places for your wardrobe basics has become very different,” says Marshal Cohen, chief industry analyst of the NPD Group. “People have started to say, ‘I don’t want to look like everyone else. I’m looking for a unique experience. If I’m going to spend my hard-earned money, the little discretionary income that I have, make it worth my while.”

The ability to deliver the message of simplifying purchases with higher quality, fair pricing and narrower assortments resonates especially with Millennials, who have streamlined their wardrobes and are in search of convenience, says Helen Bulwik, partner at Newport Board Group, a firm that advises CEOs in the Bay Area.

“These companies are very specific and very niche, but there’s tremendous growth potential,” says Bulwik, noting that 80 percent of an apparel business can be driven by basics, but innovation must comprise the last 20 percent.

Among these burgeoning e-tailers is American Giant, based in downtown San Francisco and founded 3½ years ago by former Chrome Industries executive Bayard Winthrop on the premise that he could reinvent an iconic American silhouette: the hoodie.

The brand’s first product launch that continues to be its bestseller is the classic zip-up made from 100 percent North Carolina-grown cotton. It retails for $89 and is comparably priced to cotton-polyester blend hoodies sold for $78 at Levi’s or J.Crew.

Well thought-out design details make for a truly better fit. Reinforced elbow patches, a double-lined hood and a more tailored silhouette allow it to blend seamlessly from weekend outfitting to the Bay Area’s ultra-casual tech-worker uniform.

After a December 2012 Slate article declared American Giant’s hoodie “The greatest sweatshirt ever made,” sales skyrocketed and the company has been chasing production demand ever since.

While Winthrop has declined to share figures, Fast Company reported in 2015 that American Giant has tripled its business each year since 2012. Winthrop says the company is experiencing “blistering growth,” hiring and making product as fast as it can, and has expanded from one to four U.S. production facilities since launch.

“Old-world retailers are stuck in a horrible position because they’re stuck in an economic structure they’re committed to,” says Winthrop, who co-authored the book “I F— Love That Company: How a New Generation of Brand Builders Is Defining the Post-Amazon World.”

“They have customers leaving them in droves because they’ve lost resonance with those brands. They don’t stand for anything anymore. And their quality paradigm isn’t there anymore,” he says. “So there’s an emerging group of new brands that are saying, ‘We have a new model here that’s liberated to invest in quality and in values that matter to this customer.’”

American Giant’s classic zip sweatshirt.

Photo: American Giant

For American Giant, those values hark back 50 years when domestic brands differentiated themselves based on quality. For example, back then, a Champion sweatshirt or a Levi’s 501 jean were affordable and would last for decades. Not so anymore, says Winthrop, mainly due to the prevalence of low-quality, offshore manufacturing.

“We don’t build our business based on massive storage structures and massive marketing,” says Winthrop, who spent 20 years of his career manufacturing footwear and apparel overseas for companies including Atlas Snow-Shoe and Freebord Manufacturing. “We take the savings you get from eliminating real estate and marketing and employ that into the best quality product in the marketplace.”

For San Francisco startup Cuyana, gaining customer trust and delivering a memorable shopping experience is key. The brand espouses buying with intention its ethical and sustainable luxury women’s wear to build a lean and functional wardrobe priced within reach.

Cuyana’s sumptuous 100 percent baby alpaca cape made in Peru, for instance, is priced at $195. Its signature white Toquilla Straw Panama hat made in Ecuador retails for $65.

The entire Cuyana product line is designed in-house and helps to support local economies by being manufactured out of specialized factories in the product’s country of origin.

“We never push a product on our customer if they’re not sure,” says Cuyana co-founder and CEO Karla Gallardo, who launched the company as an omni-channel business in 2013 with both an e-tail site and an office-cum-second-story-atelier in Union Square. “We’d rather spend a long time sharing the story behind our product and have them come back to try it on again rather than push a sale. We build very strong bonds with our customers.”

Since launch, the brand has experienced “incredible growth,” says Gallardo, who declined to disclose financial results, but noted that 40 percent of Cuyana’s business comes from repeat customers, a rate that is three times the industry average.

The design team has expanded from Gallardo to three full-time designers among its team of now 40 employees, 75 percent of whom are full time.

Cuyana's Panama hat ($65) is made in Ecuador.

Photo: Cuyana

“People consume consciously for different reasons. Some consumers may think about whether the product process is ethical, some want to know if they use animal skins, others want to know if it is quality and it will last — and we focus on that last point,” says Gallardo, an Ecuador native who noticed upon moving to the United States in 2001 the prevalence of product waste in the fast-fashion cycle. “There’s certainly more of a trend to want to know more about a product before buying.”

On the other hand, Modern Citizen’s Lee doesn’t mind having her brand of basics-with-an-edge associated with fast fashion, which she says can have more to do with the speed of the retailer’s design cycle than the product life on the wearer.

The website and chic showroom tucked away on the second story of a building on Octavia Street carry the brand’s own women’s clothing and a small selection of home accessories, as well as a curated selection of apparel from women-owned firms in New York and Los Angeles.

With all pieces strategically priced under $200, Lee says the brand stands for an accessible, constantly rotating assortment of quality, on-trend essentials made in short production to avoid a typical mass retailer’s overruns and constant discounting that contribute to consumer waste.

One of their top-selling, consistently sold-out items (deemed by the fashion press as an “it” shoe last season), was a reinvention of the classic ballet flat. The pointy Steel-Toed Slipper designed by Lee herself was constructed in Italian leather in nine color combinations with transparent PVC side panels and retailed for $89.

A nonfashion person may gravitate toward a classic black ballet flat from J. Crew, says Lee, but the chic, young Modern Citizen woman seeks out a shoe with a fashion element people will comment on — and that she can still wear with everything.

“We don’t necessarily characterize what we do as basics, but I think a lot of our clothes are timeless,” says the 29-year-old Russian Hill resident. “They’re not in crazy colors or something you’d throw away after a season, but there’s always something a little bit special about them because our customer never wants to look, well, basic.”